Blockchain, Artificial Intelligence, Machine Learning not just for geeks; they can help SMEs, traders too

Banks in India should start conducting POCs (proof of concept) in this DLT (distributed ledger technology) to get a deeper understanding of its (blockchain technology) implications from the dimension of deployment in trade finance.

ASSOCHAM along with Deloitte recently published a report stating how digital technologies like blockchain, artificial intelligence (AI), machine learning (ML) and robotic process automation can help eliminate inefficiencies in our current trade finance system, making the process efficient for the banks, buyers, sellers and SME/MSMEs.

The report quotes, “Banks in India should start conducting POCs (proof of concept) in this DLT (distributed ledger technology) to get a deeper understanding of its (blockchain technology) implications from the dimension of deployment in trade finance.”

However before the adoption at a mass level, the technology must address issues like onboarding users, regulatory acceptance, changing role of banks, infrastructural issues and firms/businesses operating on small scale.

The report further added that innovation the Artificial Intelligence sector is moving at a fast pace. For it could be used to detect transactions quality, or opportunity to market cross channels, to ensure banks are utilizing their resources optimally.

The study stated that demonetisation and GST led to the slow growth in the country’s trade. With 2017 seeing a global trade expansion as a result of acceleration in the global trade growth in the first half of the year, the country’s slow growth rate of trade has been a major concern.

“Many are attributing this short term down turn as a negative fallout from the reforms – Demonetization and Goods and Service Tax (GST).”

According to the study, India’s trade deficit hit a 35 month high, at $14 billion as exports declined, for the first time in 14 months by 1.12 per cent in October 2017, to $23.1 billion. “Exporters faced a liquidity crunch after paying GST for four months in a row without any refund.”

The report however said that fine-tuning GST data that feeds IT (information technology) platforms will have a significant impact on trade finance.

The ASSOCHAM-Deloitte study further said that Government initiatives have played a big role in improving ease of doing business ranking from 130 in 2016 to current rank of 100, yet a lot of work remains to be done.

“India significantly lags on key metrics such as: turn-around time and operating costs, reliance on physical documentation, requirement of liaison with multiple stakeholders on disparate systems and lack of transparency, increase the cost of compliance,” said the report.

“These limitations, limit trading volumes, which in turn limit the speed and efficiency of trade finance,” it added.

The joint study stated that with new models of funding and credit assures backing the trade which can change the current trade finance process significantly.